In Andrew Charles Ferguson & Gemma Mary Ferguson v HMRC [2026] TC09782, the First Tier Tribunal (FTT) found that residential rates applied on a property purchase where a let paddock formed part of the grounds of the property.
The Fergusons purchased a property worth £4,250,000 consisting of 4.3 acres, which included an eight-bedroom house, gardens and grounds, outbuildings, swimming pool, tennis court and a paddock.
- The property was purchased 'off-market' in October 2022.
- The paddock was part of the contiguous land surrounding the purchased property.
- The paddock was let to a third party who operated a livery business.
- The Fergusons submitted a self-assessed Stamp Duty Land Tax (SDLT) return on 6 October 2025.
- They deemed the property to be 'mixed use' and that £202,000 of SDLT was chargeable in respect of the purchase.
- HMRC opened an enquiry and, following correspondence, issued a closure notice in November 2023.
- Consequential amendments were made to the return and SDLT was increased by £219,250.
The FTT sought to determine if the paddock formed part of the grounds of the property. The Fergusons believed the paddock did not form part of the garden or grounds of the property and was functionally separate from the house. They also argued that the paddock was integral to a livery business that was operated separately by a third party as a trade.
The multi-factorial test previously used in HMRC v Suterwalla [2024] UKUT 00188 was applied.
The FTT found:
- The paddock sat within the borders of the property and could only be reached across the residential grounds, strongly connecting the paddock to the dwelling house and its grounds.
- The paddock sat within a wider envelope of a tennis court and gardens and was contiguous with those amenity areas.
- A grazing licence attached to the paddock was not binding and the Fergusons were not obliged to permit continued occupation of the paddock by the licensees.
- In an assessment of garden and grounds, third-party rights may dilute amenity, but do not change the character of the land where those rights do not bind the new owner and where access is through the property's residential grounds.
- Given the extensive scale and overall residential character, the modest paddock was well within the ordinary language of what would be considered 'grounds'.
The appeal was dismissed.
The FTT echoed the 'slightly exasperated tone' in Jessica Harjono & Anor v HMRC [2024] TC09107, which stated, "In mixed use situations it is increasingly being asserted that any letting of part of a property for a market rent is commercial and, as if by magic, the land leaves the residential pot and turns up in the mixed use pot. When looking at the use to which land is put, simply inserting some form of 'commercial' agreement between a landowner and a third-party does not, of itself, generate a use which is of significant weight in the multifactorial evaluation. One needs to look through that agreement and consider the end use of the land as well."
Useful guides on this topic
SDLT: At a glance, Stamp Duty Land Tax, rates & allowances
What is Stamp Duty Land Tax (SDLT)? What are the rates of Stamp Duty Land Tax (SDLT)?
SDLT: Residential property & dwellings
What is residential property for Stamp Duty Land Tax (SDLT)? What tax rate applies? What garden and grounds are subject to higher rates of SDLT?
SDLT: Residential property higher rates
A guide to the Stamp Duty Land Tax (SDLT) higher rate charge on residential property, when it applies and what reliefs are available to exempt buyers from the charge.
How to appeal an HMRC decision
Disagree with a HMRC decision? How to appeal, what type of decision can you appeal, what are your different options when you disagree with HMRC? What are the key steps in making an appeal?
External link
Andrew Charles Ferguson & Gemma Mary Ferguson v HMRC [2026] TC09782